Central bank governor Zhou Xiaochuan has pledged a 'flexible and prudent' monetary policy and greater efforts to develop the country's financial markets this year. Mr Zhou's New Year resolution, published on the website of the People's Bank of China, rounded off an eventful 2008 marked by financial turmoil, a resulting U-turn in Beijing's monetary policy and criticism of the regulator's perceived lack of flexibility in the face of the rapidly deepening global economic crisis. The bank had been trying hard to cool what it felt was an overheating economy by increasing required reserves and interest rates in the first half of last year. But then it switched to a moderately loose monetary policy, marked by five consecutive rate cuts. These culminated in a deep 108 basis point cut in November. 'The PBOC will continue to exercise the flexible and prudent monetary policy and improve the efficiency of our regulation and control ... to provide a better financial environment for the social and economic development [in China],' Mr Zhou wrote. He and his agency have been blamed by some economists and the press for being slow in reacting to the sharp economic slowdown. The Securities Times, a newspaper affiliated to the People's Daily, even selected him as the 'Erratic Forecaster of the Year' in a parody article, citing his insistence on a tight monetary policy even in August, on the eve of the financial breakdown. 'I think we have to be fair with the central bank, which has a relatively short history compared with its western peers and no experience in grappling with a crisis of this magnitude,' said Lu Zhengwei, the chief economist of the Industrial Bank. 'But, admittedly, the PBOC could have moved more swiftly, and there were [warning] signs ... which went neglected in one way or another.' He said the success of the country's monetary policy this year hinged on better co-ordination with other central banks around the world. But Mr Zhou has his defenders. Andy Xie, an outspoken independent observer, sympathised with Mr Zhou's apparent obsession with tight monetary policy. He said most of the money unleashed into the market as a result of the change of tack would turn into speculative capital instead of investment into the real economy. 'Unlike in other countries, monetary policy is far from the real issue in China,' he said. 'It's how the money is being used rather than the availability of the money.'